Why is Nepal’s Stock Market Rising Recently? A Confluence of Factors Ignites Investor Optimism

By adminStock market
The Securities Board of Nepal (SEBON) has suspended the issuance process of Ghorahi Cement Industry Limited's (GCIL) initial public offering (IPO) citing fake subscription. SEBON said that it had received complaints from investors about fake subscription in the IPO. The board said that it had investigated the matter and found that there was indeed evidence of fake subscription. As a result, SEBON has suspended the IPO issuance process until further notice. The board said that it will take necessary action against those involved in the fake subscription. The IPO of GCIL was open for subscription from June 15 to 19. The company had offered 6,911,670 units of shares to the general public at Rs 435 per share. The IPO was oversubscribed by more than 200 times. However, SEBON's decision to suspend the issuance process has raised concerns among investors. Investors are worried that they may not be able to get the shares they applied for. They are also concerned about the possibility of losing their money. SEBON has said that it will refund the money of investors who have applied for the IPO. However, it is not clear when the refund will be made. The suspension of the IPO issuance process of GCIL is a setback for the Nepali capital market. It has also raised questions about the credibility of the IPO process in Nepal. SEBON has said that it will take necessary steps to ensure that such incidents do not happen in the future. However, it remains to be seen how effective these steps will be. In the meantime, investors are advised to be cautious before investing in any IPO. They should do their due diligence and make sure that the company is credible.

There are a number of factors that have contributed to the recent rise in Nepal’s stock market. These include:

  • Strong economic growth: Nepal’s economy has been growing steadily in recent years, and this has boosted investor confidence. In the fiscal year 2021/22, the economy grew by 7.8%, the highest in five years. This growth is being driven by a number of factors, including increased foreign investment, strong agricultural production, and rising tourism.
  • Recovery from the COVID-19 pandemic: The Nepali economy was severely affected by the COVID-19 pandemic in 2020. However, the economy has since recovered, and this has also boosted investor sentiment. In the first quarter of 2023, the economy grew by 4.3%, the highest in two years.
  • Increased liquidity: There is currently a lot of liquidity in the Nepali financial system, which is also supporting the stock market rally. This liquidity is coming from a number of sources, including foreign investment, remittances from Nepalis working abroad, and government spending.
  • Investor optimism: There is a general sense of optimism among investors about the future of the Nepali economy. This optimism is being driven by the factors mentioned above, as well as by the government’s commitment to economic reform.

As a result of these factors, the Nepali stock market has been on a tear in recent months. The NEPSE index, which measures the performance of the stock market, has more than doubled in the past year. This rally has made Nepal’s stock market one of the best performing in the world.

Of course, there are no guarantees that the stock market rally will continue. However, the factors mentioned above suggest that the Nepali economy is on a solid footing, and this should support the stock market in the long term.

Here are some of the shares that are best to buy in Nepal today, according to Investopaper:

  • Forward Microfinance Laghubitta Bittiya Sanstha Limited (FOWAD): FOWAD is one of the leading microfinance institutions in Nepal. It has a strong track record of growth and profitability.
  • National Microfinance Laghubitta Bittiya Sanstha Limited (NMFBS): NMFBS is another leading microfinance institution in Nepal. It has a wide network of branches and a strong customer base.
  • Swabalambban Laghubitta Bittiya Sanstha Limited (SWBBL): SWBBL is a relatively new microfinance institution, but it has grown rapidly in recent years. It has a strong focus on rural areas.
  • Deprosc Laghubitta Bittiya Sanstha Limited (DDBL): DDBL is a microfinance institution that specializes in lending to small businesses. It has a strong track record of providing financial services to underserved communities.
  • Soaltee Hotel (SHL): SHL is a leading hotel chain in Nepal. It has a portfolio of hotels in Kathmandu, Pokhara, and other major cities.
  • Unilever Nepal Limited (UNL): UNL is the leading consumer goods company in Nepal. It produces a wide range of products, including food, beverages, and personal care products.

These are just a few of the many shares that are available to investors in Nepal. It is important to do your own research before investing in any particular share.

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